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Last updated on April 18, 2014 at 1:21 EDT

Cellcom Israel Announces Fourth Quarter and Full Year 2012 Results

March 4, 2013

NETANYA, Israel, March 4, 2013 /PRNewswire/ –

2012 results reflect the continued impact of the heightened competition in

the cellular market

The Company continues to execute its efficiency plan, which led so far to

savings at an annual rate of approximately NIS 550 million[1]

Cellcom Israel presents a 188% increase in free cash flow[2]for the fourth
quarter of 2012 compared with the fourth quarter last year and a 20.6% increase in 2012

compared with 2011

—–

2012 Full Year Highlights (compared to 2011[3]):

        - Free cash flow increased by 20.6% to NIS 1,130 million ($303 million)
        - Total Revenues decreased 8.7% to NIS 5,938 million ($1,591 million)
        - Service revenues decreased 3.7% to NIS 4,582 million ($1,228 million)
        - EBITDA[2] decreased 19.1% to NIS 1,753 million ($470 million)
        - EBITDA margin 29.5%, down from 33.3%
        - Operating income decreased 30.7% to NIS 985 million ($264 million)
        - Net income decreased 35.6% to NIS 531 million ($142 million)
        - Cellular subscriber base totaled approx. 3.199 million[4] subscribers (at the
          end of December 2012)

Fourth Quarter 2012 Highlights (compared to fourth quarter of 2011):

        - Free cash flow increased by 188% to NIS 288 million ($77 million)
        - Total Revenues decreased 15.5% to NIS 1,407 million ($377 million)
        - Service revenues decreased 13.4% to NIS 1,066 million ($286 million)
        - EBITDA decreased 12% to NIS 374 million ($100 million)
        - EBITDA margin 26.6%, up from 25.5%
        - Operating income decreased 7.8% to NIS 189 million ($51 million)
        - Net income increased by 48.7% to NIS 113 million ($30 million)

————————————————–

1. Based on a comparison of fourth quarter 2012 expenses to fourth quarter 2011
expenses.

2. Please see “Use of Non-IFRS financial measures” section in this press release.

3. The Company’s consolidated financial results for 2011 include the results of
Netvision Ltd., or Netvision, for the months September – December 2011, following the
completion of Netvision’s acquisition by the Company, on August 31, 2011.

4. After removal of approximately 138,000 data applications subscribers (M2M) from the
Company’s cellular subscriber base in the fourth quarter of 2012. See “Cellular subscriber
base” section in this press release.

NETANYA, Israel Cellcom Israel Ltd. (NYSE: CEL TASE: CEL) (“Cellcom Israel” or the
“Company” or the “Group”), announced today its financial results for the fourth quarter
and full year ended December 31, 2012. Revenues for the fourth quarter and full year 2012
totaled NIS 1,407 million ($377 million) and NIS 5,938 million ($1,591 million),
respectively; EBITDA for the fourth quarter 2012 totaled NIS 374 million ($100 million),
or 26.6% of total revenues, and for the full year 2012 totaled NIS 1,753 million ($470
million), or 29.5% of total revenues; and net income for the fourth quarter and full year
2012 totaled NIS 113 million ($30 million) and NIS 531 million ($142 million),
respectively. Basic earnings per share for the fourth quarter and full year 2012 totaled
NIS 1.14 ($0.31) and NIS 5.34 ($1.43), respectively.

Commenting on the results, Nir Sztern, the Company’s Chief Executive Officer, said:
“2012 was a year of extensive activity for the Cellcom Group. In that year we completed
the merger process with Netvision, dealt with the increased competition and adjusted the
Group to the new market conditions. These activities will constitute a key layer for the
continued success of the Group in the coming years.

We completed a complicated merger of two large companies in a remarkable speed and
quality, while achieving all the ambitious goals that we set for ourselves. Today, the
Group operates with a unified headquarters and with sales and service units offering a
wide variety of mobile and landline communications services to our customers. Netvision’s
results for 2012, with over 112,000 landline telephony customers (an increase of
approximately 32,000 customers), an increase in the number of internet (ISP) customers and
annual EBITDA of NIS 283 million, demonstrate the merger’s success.

The Group implements aggressive efficiency measures in all areas of its operations,
which led so far to savings at an annual rate of approximately NIS 550 million. During
2012, we changed processes, optimized our operations, reduced headcount and cut expenses,
all that while providing a high level of service in our call and service centers. We
intend to continue the efficiency measures in 2013 as well”.

On market competition, Nir Sztern commented: “During 2012, we successfully launched
the “Cellcom Total” marketing plans, but the low price levels in the market together with
the intensified competition and the transition to offering of aggressive marketing plans
by some of our competitors, led to a significant decrease in revenues. These trends are
expected to further adversely affect the Company’s results of operations in the first
quarter of 2013.

Cellcom Israel has been successful in keeping its position as a market leader in terms
of number of cellular subscribers and continues its preparations to dealing with the
challenges of 2013. We will continue to strengthen Cellcom Israel’s position as a leading
communications group, which provides comprehensive communications solutions to the
customer”.

Yaacov Heen, Chief Financial Officer, commented: “2012 was a challenging year for the
communications market and for the Company. While we continue implementing our efficiency
plan in order to adjust the Company’s expense structure to the revenue level, we expect
further erosion in revenues in the first quarter of 2013, which will lead to further
erosion of profitability.

In the fourth quarter of 2012 we generated free cash flow of NIS 288 million, a 188%
increase compared with the fourth quarter of 2011. We concluded 2012 with free cash flow
of NIS 1,130 million, a 20.6% increase compared with 2011, despite the erosion of
revenues. The increase in free cash flow in 2012 is primarily a result of the decrease in
purchase of cellular handsets, due to a significant decrease in sales of such handsets,
and the efficiency measures implemented during the year.

The Company’s Board of Directors decided not to distribute a dividend for the fourth
quarter of 2012, in order to further strengthen the Company’s balance sheet at this time
of market uncertainty. The Board of Directors will re-evaluate its decision in the coming
quarters as market conditions develop, and taking into consideration the Company’s needs”.

Main Consolidated Financial Results for 2012 (compared to 2011 results, which include
Netvision’s Results for September through December 2011 only):

                                             NIS millions     % of  Revenues
                                             2012    2011     2012    2011
        Revenues - Services                   4,582   4,759   77.2%   73.1%
        Revenues - Equipment                  1,356   1,747   22.8%   26.9%
        Total revenues                        5,938   6,506  100.0%  100.0%
        Cost of revenues - Services         (2,450) (2,126) (41.3%) (32.7%)
        Cost of revenues - Equipment        (1,013) (1,282) (17.0%) (19.7%)
        Total cost of revenues              (3,463) (3,408) (58.3%) (52.4%)
        Gross Profit                          2,475   3,098   41.7%   47.6%
        Marketing and Sales Expenses          (865)   (990) (14.6%) (15.2%)
        General and Administration Expenses   (629)   (685) (10.6%) (10.5%)
        Other Income (Expenses), net              4     (1)    0.1%       -
        Operating income                        985   1,422   16.6%   21.9%
        Financing expenses, net               (259)   (293)  (4.4%)  (4.5%)
        Income before Income Tax                726   1,129   12.2%   17.4%
        Income Tax                            (195)   (304)  (3.3%)  (4.7%)
        Net Income                              531     825    8.9%   12.7%
        Free Cash Flow                        1,130     937   19.0%   14.4%
        EBITDA                                1,753   2,167   29.5%   33.3%

table continued

                                                          US$ millions
                                                          (convenience
                                            % Change       translation)
                                                          2012      2011
        Revenues - Services                   (3.7%)     1,228     1,275
        Revenues - Equipment                 (22.4%)       363       468
        Total revenues                        (8.7%)     1,591     1,743
        Cost of revenues - Services            15.2%     (656)     (570)
        Cost of revenues - Equipment         (21.0%)     (272)     (343)
        Total cost of revenues                  1.6%     (928)     (913)
        Gross Profit                         (20.1%)       663       830
        Marketing and Sales Expenses         (12.6%)     (232)     (265)
        General and Administration Expenses   (8.2%)     (168)     (184)
        Other Income (Expenses), net                         1         -
        Operating income                     (30.7%)       264       381
        Financing expenses, net              (11.6%)      (70)      (79)
        Income before Income Tax             (35.7%)       194       302
        Income Tax                           (35.9%)      (52)      (81)
        Net Income                           (35.6%)       142       221
        Free Cash Flow                         20.6%       303       251
        EBITDA                               (19.1%)       470       580

Main Financial Data by Companies:

                                     Cellcom Israel without
                                            Netvision
                                                     Change
                                     2012     2011      (%)
                                      NIS millions
        Total revenues              4,891    6,132   (20.2%)
        Service revenues            3,617    4,420   (18.2%)
        Equipment revenues          1,274    1,712   (25.6%)
        Operating Income              907    1,425   (36.4%)
        EBITDA                      1,470    2,084   (29.5%)
        EBITDA, as a percent of
        total revenues              30.1%    34.0%   (11.5%)

TABLE CONTINUED

                                             Consolidation
                                              adjustments  Consolidated
                                     Netvision      (*)        results
                                       2012                      2012
                                                NIS millions
        Total revenues               1,134          (87)        5,938
        Service revenues             1,052          (87)        4,582
        Equipment revenues              82             -        1,356
        Operating Income               182         (104)          985
        EBITDA                         283             -        1,753
        EBITDA, as a percent of
        total revenues               25.0%             -        29.5%

(*)Include inter-company revenues between Cellcom Israel and Netvision, and
amortization expenses related to intangible assets attributable to the acquisition of
Netvision.

Main Performance Indicators (data refers to cellular subscribers only):

                                                 Change
                                  2012  2011       (%)
        Cellular subscribers at
        the end of the year (in
        thousands) [5]            3,199 3,349    (4.5%)
        Churn Rate for cellular
        subscribers (in %) [6]    31.5% 25.1%     25.5%
        Monthly cellular ARPU
        (in NIS)                   87.5 106.0   (17.5%)
        Average Monthly cellular
        MOU (in minutes)            390   346     12.7%

Financial Review

Revenues for 2012 decreased 8.7% totaling NIS 5,938 million ($1,591 million), compared
to NIS 6,506 million ($1,743 million) last year. The decrease in revenues is attributed to
a 22.4% decrease in equipment revenues, totaled NIS 1,356 million ($363 million) in 2012
compared to NIS 1,747 million ($468 million) in 2011, as well as a 3.7% decrease in
service revenues as a result of the increased competition in the market, intensified
further by the entry of new operators to the Israeli cellular market, from NIS 4,759
million ($1,275 million) in 2011 to NIS 4,582 million ($1,228 million) in 2012. These
decreases were partially offset by an increase in Netvision’s contribution to revenues,
which totaled NIS 1,047 million ($280 million) (excluding inter-company revenues) in 2012,
compared to NIS 374 million ($100 million) in 2011. The increase in Netvision’s
contribution was mainly due to the consolidation of Netvision’s results for September
through December 2011 only in 2011 (following the completion of the acquisition of
Netvision on August 31, 2011), while in 2012 the Company consolidated Netvision’s results
for the full year (hereinafter “difference in the period of consolidation of Netvision’s
results”).

————————————————–

5. Data for 2012 is after removal of approximately 138,000 data applications
subscribers (M2M) from the Company’s cellular subscriber base and data for 2011 is after
removal of approximately 52,000 cellular subscribers from the Company’s cellular
subscriber base, made during the fourth quarters of 2012 and 2011, respectively. See
“Cellular subscriber base” section in this press release.

6. Churn rates for 2012 and 2011 do not include the removal of approximately 138,000
and 52,000 data/cellular subscribers, respectively, from the Company’s cellular subscriber
base, made during the fourth quarter of 2012 and 2011, respectively. See “Churn rate”
section in this press release.

The decrease in service revenues in 2012 resulted mainly from the ongoing erosion in
the price of cellular services, resulting from the intensified competition in the cellular
market as aforesaid. Most of this decrease was offset by an increase in Netvision’s
contribution to service revenues due to the difference in the period of consolidation of
Netvision’s results, which totaled NIS 965 million ($259 million) (excluding inter-company
revenues) in 2012, as compared to NIS 339 million ($91 million) in 2011. After elimination
of Netvision’s contribution to service revenues, service revenues for 2012 decreased 18.2%
compared with 2011.

The decrease in equipment revenues in 2012 resulted mainly from an approximately 37%
decrease in the number of cellular handsets sold in 2012, as compared with 2011, due to
regulatory changes, which led to the entry of many competitors to the cellular handsets
market. This decrease was partially offset by a significant increase in revenues from sale
of tablets in 2012 compared with 2011. The decrease in equipment revenues was also offset
in part by an increase in Netvision’s contribution to equipment revenues due to the
difference in the period of consolidation of Netvision’s results, which totaled NIS 82
million ($22 million) in 2012, compared to NIS 35 million ($9 million) in 2011.

Revenues for the fourth quarter of 2012 decreased 15.5% totaling NIS 1,407 million
($377 million), compared to NIS 1,665 million ($446 million) in the fourth quarter last
year. The decrease in revenues is attributed mainly to a 13.4% decrease in service
revenues, which totaled NIS 1,066 million ($286 million) in the fourth quarter 2012 as
compared to NIS 1,231 million ($330 million) in the fourth quarter last year. The decrease
in revenues also resulted from a 21.4% decrease in equipment revenues, which totaled NIS
341 million ($91 million) in the fourth quarter of 2012 as compared to NIS 434 million
($116 million) in the fourth quarter of 2011. Netvision’s contribution to revenues for the
fourth quarter of 2012 totaled NIS 270 million ($72 million) (excluding inter-company
revenues) compared to NIS 276 million ($74 million) in the fourth quarter of 2011.

The decrease in fourth quarter 2012 service revenues resulted mainly from a decrease
in cellular services revenues, due to the ongoing erosion in the price of these services
as a result of the intensified competition in the cellular market. Netvision’s
contribution to service revenues for the fourth quarter of 2012 totaled NIS 239 million
($64 million) (excluding inter-company revenues) compared to NIS 247 million ($66 million)
in the fourth quarter of 2011.

The decrease in fourth quarter 2012 equipment revenues resulted from a 29% decrease in
the number of cellular handsets sold during the fourth quarter of 2012 compared with the
fourth quarter of 2011, as well as a 6.5% decrease in the average cellular handset sell
price in the fourth quarter of 2012 as compared to the fourth quarter of 2011. The
decrease in equipment revenues in the fourth quarter of 2012 was partially offset by an
increase in revenues from sale of tablets. Netvision’s contribution to equipment revenues
for the fourth quarter of 2012 totaled NIS 31 million ($8 million) compared to NIS 29
million ($8 million) in the fourth quarter of 2011.

Cost of revenues for 2012 totaled NIS 3,463 million ($928 million), compared to NIS
3,408 million ($913 million) in 2011, a 1.6% increase. This increase is attributed mainly
to an increase in Netvision’s contribution to cost of revenues, primarily due to the
difference in the period of consolidation of Netvision’s results, which totaled NIS 749
million ($201 million) (excluding inter-company expenses) compared to NIS 264 million ($71
million) in 2011. Cost of revenues for 2012 excluding Netvision’s contribution decreased
13.7%. Most of the increase in Netvision’s contribution to cost of revenues was offset by
a decrease in cost of cellular services and equipment, mainly the cost of content and
value added services, a decrease in depreciation and amortization expenses and a decrease
in cost of cellular handsets, primarily as a result of a decrease in the number of
cellular handsets sold during 2012 as compared with 2011.

Cost of revenues for the fourth quarter of 2012 decreased to NIS 873 million ($234
million) from NIS 974 million ($261 million) in the fourth quarter last year, a decrease
of 10.4%. This decrease resulted from the same reasons as for the decrease in the annual
cost of cellular services and equipment mentioned above.

Gross profit for 2012 decreased 20.1% to NIS 2,475 million ($663 million) from NIS
3,098 million ($830 million) in 2011. Netvision’s contribution to gross profit for 2012
totaled NIS 298 million ($80 million) compared to NIS 110 million ($29 million) in 2011,
mainly due to the difference in the period of consolidation of Netvision’s results. Gross
profit margin for 2012 amounted to 41.7%, down from 47.6% in 2011. Gross profit for the
fourth quarter 2012 decreased 22.7% to NIS 534 million ($143 million) from NIS 691 million
($185 million) in the fourth quarter of 2011. Gross profit margin for the fourth quarter
2012 amounted to 38%, down from 41.5% in the fourth quarter of 2011.

Selling, Marketing, General and Administrative Expenses (“SG&A Expenses”) for 2012
decreased 10.8% to NIS 1,494 million ($400 million), compared to NIS 1,675 million ($449
million) in 2011. SG&A Expenses for 2012 excluding Netvision’s contribution decreased
18.8%. This decrease is primarily the result of the efficiency measures implemented by the
Company, which led to a decrease in payroll expenses, sales commissions and other
expenses. The decrease in sales commissions also resulted from a decrease in the number of
cellular handsets sold in 2012, as compared with 2011. The decrease in SG&A expenses also
resulted from a decrease in advertising expenses and amortization expenses related to
capitalized sales commissions. These decreases were partially offset by an increase in
Netvision’s contribution to SG&A expenses, mainly due to the difference in the period of
consolidation of Netvision’s results, which totaled NIS 226 million ($61 million) in 2012,
including amortization expenses related to intangible assets attributable to the
acquisition of Netvision, compared to NIS 113 million ($30 million) in 2011.

SG&A Expenses for the fourth quarter of 2012 decreased 28.3% to NIS 349 million ($93
million), compared to NIS 487 million ($130 million) in the fourth quarter of 2011. This
decrease resulted from the same reasons as for the decrease in the annual SG&A expenses
mentioned above.

Operating income for 2012 decreased 30.7% to NIS 985 million ($264 million) from NIS
1,422 million ($381 million) in 2011. Netvision’s contribution to operating income in 2012
totaled NIS 78 million ($21 million), including amortization expenses related to
intangible assets attributable to the acquisition of Netvision, compared to a negative
contribution of NIS 3 million ($1 million) in 2011. Operating income for the fourth
quarter 2012 decreased 7.8% to NIS 189 million ($51 million) from NIS 205 million ($55
million) in the fourth quarter of 2011.

EBITDA for 2012 decreased 19.1% to NIS 1,753 million ($470 million) from NIS 2,167
million ($580 million) in 2011. EBITDA, as a percent of revenues, totaled 29.5%, down from
33.3% in 2011. Netvision’s contribution to EBITDA for 2012 totaled NIS 283 million ($76
million) compared to NIS 83 million ($22 million) in 2011, mainly due to the difference in
the period of consolidation of Netvision’s results. EBITDA for the fourth quarter 2012
decreased 12% totaling NIS 374 million ($100 million) compared to NIS 425 million ($114
million) in the fourth quarter of 2011. EBITDA for the fourth quarter 2012, as a percent
of fourth quarter revenues, totaled 26.6%, up from 25.5% in the fourth quarter of 2011.

Financing expenses, net for 2012 decreased 11.6% and totaled NIS 259 million ($70
million), compared to NIS 293 million ($79 million) in 2011. The decrease resulted from a
decrease in Israeli Consumer Price Index (CPI) linkage expenses, associated with the
Company’s debentures, due to decreased inflation rate in 2012, compared with 2011, an
increase in interest income, associated with handsets sales, as well as an increase in
gains from the Company’s investment in tradable debentures in 2012, compared with 2011.
The decrease in financing expenses, net, also resulted from income from foreign currency
exchange differences related to trade payables in 2012, which resulted mainly from
appreciation of 2.3% of the NIS against the US dollar, compared to loss from foreign
currency exchange differences in 2011, which resulted from depreciation of 7.7% of the NIS
against the US dollar in that year. These effects were partially offset by an increase in
interest expenses, associated with the Company’s debentures, in 2012, compared with 2011,
due to the higher debt level following the issuance of additional debentures in March
2012. The decrease in financing expenses, net, was offset in part also by a decrease in
deposit interest income, due to lower deposits balance and decreased interest rate in 2012
compared with 2011.

Financing expenses, net for the fourth quarter 2012 decreased 31.1% and totaled NIS 42
million ($11 million), compared to NIS 61 million ($16 million) in the fourth quarter of
2011. The decrease resulted mainly from income from foreign currency exchange differences
related to trade payables in the fourth quarter of 2012, which resulted mainly from
appreciation of 4.6% of the NIS against the US dollar, compared to loss from foreign
currency exchange differences in the fourth quarter of 2011, which resulted from
depreciation of 2.9% of the NIS against the US dollar in that quarter. The decrease in
financing expenses, net, also resulted from an increase in CPI linkage income, associated
with the Company’s debentures, due to higher deflation rate in the fourth quarter of 2012,
compared with the fourth quarter of 2011. These effects were partially offset by an
increase in loss on the Company’s hedging portfolio, and an increase in interest expenses,
associated with the Company’s debentures, in the fourth quarter of 2012 compared with the
fourth quarter of 2011, due to a higher debt level.

Income tax for 2012 decreased 35.9% to NIS 195 million ($52 million) from NIS 304
million ($81 million) in 2011. The decrease in income tax resulted mainly from a 35.7%
decrease in income before income tax, as well as from a one-time deferred tax expense of
approximately NIS 33 million ($9 million) recorded in the fourth quarter of 2011,
following an amendment to the Israeli tax ordinance. The decrease in income tax was
partially offset by an increase in the corporate tax rate, which totaled 25% in 2012
compared to 24% in 2011.

Net Income for 2012 decreased 35.6% to NIS 531 million ($142 million) from NIS 825
million ($221 million) in 2011. Netvision’s contribution to net income increased from NIS
4 million ($1 million) in 2011 to NIS 67 million ($18 million) in 2012, mainly due to the
difference in the period of consolidation of Netvision’s results. Net income for the
fourth quarter 2012 increased 48.7% to NIS 113 million ($30 million) from NIS 76 million
($20 million) in the fourth quarter of 2011, as a result of one-time adverse effects on
the results of the fourth quarter of 2011, among them, the one-time deferred tax expense
recorded in the fourth quarter of 2011.

Basic earnings per share for 2012 totaled NIS 5.34 ($1.43), compared to NIS 8.28
($2.22) in 2011. Basic earnings per share for the fourth quarter 2012 totaled NIS 1.14
($0.31), compared to NIS 0.76 ($0.20) in the fourth quarter last year.

Operating Review

Cellular subscriber base – at the end of 2012 the Company had approximately 3.199
million cellular subscribers. In the fourth quarter of 2012 the Company removed
approximately 138,000 data applications subscribers (M2M-machine to machine) from its
cellular subscriber base, each of whom generated accumulated revenues of less than NIS 1
over a period of six months, after the Company added such a revenue generation criterion
to its subscriber count policy, in regards to M2M subscribers. After elimination of this
removal, during the fourth quarter of 2012 and the full year 2012, the Company’s cellular
subscriber base decreased by approximately 1,000 and 12,000 net cellular subscribers,
respectively.

The Churn Rate in 2012 totaled 31.5%, compared to 25.1% in 2011. The churn rate for
the fourth quarter 2012 totaled to 8.7%, compared to 6.0% in the fourth quarter last year.
Both annual and quarterly churn rates were primarily affected by the intensified
competition in the cellular market. Both annual and quarterly churn rates are excluding
the above mentioned removal of data subscribers.

Average monthly cellular Minutes of Use per subscriber (“MOU”) in 2012 totaled 390
minutes, compared to 346 minutes in 2011, an increase of 12.7%. MOU for the fourth quarter
2012 totaled 428 minutes, compared to 351 minutes in the fourth quarter 2011, an increase
of 21.9%. Both annual and quarterly increases in the MOU primarily resulted from
subscribers’ transition to marketing plans, which include unlimited air time minutes.

The monthly cellular Average Revenue per User (ARPU) for 2012 totaled NIS 87.5
($23.4), compared to NIS 106.0 ($28.4) in 2011. ARPU for the fourth quarter 2012 totaled
NIS 82.4 ($22.1), compared to NIS 95.4 ($25.6) in the fourth quarter last year. Both
annual and quarterly figures were affected, among others, by the ongoing erosion in the
price of cellular services, resulting from the intensified competition in the cellular
market.

Financing and Investment Review

Cash Flow

Free cash flow for 2012, increased by 20.6% to NIS 1,130 million ($303 million),
compared to NIS 937 million ($251 million) in 2011 (after elimination of the net cash
flows used for the acquisition of Netvision in the amount of NIS 1,458 million ($391
million), net of cash acquired in the amount of NIS 120 million ($32 million)). Free cash
flow for the fourth quarter of 2012 increased by 188% totaling NIS 288 million ($77
million), compared to NIS 100 million ($27 million) generated in the fourth quarter of
2011. Cash flows from operating activities for 2012 increased by 23.2%, compared with last
year, mainly due to the significant decrease in sales of cellular handsets, which led to a
decrease in the immediate payment to vendors for handset purchases, as opposed to
spreading the consideration when these handsets are sold to the Company’s subscribers
(usually in installments over a period of 36 months). The increase in cash flows from
operating activities was partially offset by a decrease in proceeds from customers due to
the decrease in service revenues in 2012 compared with 2011, resulted from the intensified
competition in the cellular market. An increase in cash flows used for acquisition of
fixed assets in 2012 compared with 2011 offset in part the increase in cash flows from
operating activities.

Total Equity

Total Equity as of December 31, 2012 amounted to NIS 500 million ($134 million),
primarily consisting of accumulated undistributed retained earnings of the Company.

Investment in Fixed Assets and Intangible Assets

During 2012 and the fourth quarter 2012, the Company invested NIS 537 million ($144
million) and NIS 140 million ($38 million), respectively, in fixed assets and intangible
assets (including, among others, rights of use of communication lines and investments in
information systems and software), compared to NIS 520 million ($139 million) and NIS 234
million ($63 million) in 2011 and the fourth quarter 2011, respectively.

Dividend

On March 4, 2013, the Company’s board of directors decided not to declare a cash
dividend for the fourth quarter of 2012. In making its decision, the board of directors
considered the Company’s dividend policy and business status and determined, that given
the continued intensified competition and substantial changes in pricing and their
continued current and expected adverse effect on the Company’s results of operations, the
Company should wait for the competitive situation to clarify, to strengthen the Company’s
balance sheet and not distribute a dividend at this time. The board of directors will
re-evaluate its decision in future quarters. No future dividend declaration is guaranteed
and is subject to the Company’s board of directors’ sole discretion, as detailed in the
Company’s annual report for the year ended December 31, 2012 on Form 20-F, under “Item 8 -
Financial Information – A. Consolidated Statements and Other Financial Information -
Dividend Policy”.

Debentures

For information regarding the Company’s summary of financial liabilities and details
regarding the Company’s outstanding debentures as of December 31, 2012, see “Disclosure
for Debenture Holders” section in this press release.

Conference Call Details

The Company will be hosting a conference call on Monday, March 4, 2013 at 10:00 am
EST, 07:00 am PST, 15:00 GMT, 17:00 Israel time. On the call, management will review and
discuss the results, and will be available to answer questions. To participate, please
either access the live webcast on the Company’s website, or call one of the following
teleconferencing numbers below. Please begin placing your calls at least 10 minutes before
the conference call commences. If you are unable to connect using the toll-free numbers,
please try the international dial-in number.

US Dial-in Number: 1 888 668 9141 UK Dial-in Number: 0 800 917 5108

Israel Dial-in Number: 03 918 0609 International Dial-in Number: +972 3 918 0609

at: 10:00 am Eastern Time; 07:00 am Pacific Time; 15:00 UK Time; 17:00 Israel Time

To access the live webcast of the conference call, please access the investor
relations section of Cellcom Israel’s website: http://www.cellcom.co.il
[http://investors.ircellcom.co.il/events.cfm ]. After the call, a replay of the call will
be available under the same investor relations section.

Annual report for 2012

Cellcom Israel will be filing its annual report for the year ended December 31, 2012
(on form 20-F) with the US Securities and Exchange Commission today, March 4, 2013. The
annual report will be available for download at the Cellcom Israel’s website in the
investor relations section of Cellcom Israel’s website at: http://www.cellcom.co.il
[http://investors.ircellcom.co.il/events.cfm ]. Cellcom Israel will furnish a hard copy to
any shareholder who so requests, without charge. Such requests may be sent through the
Company’s website or by sending a postal mail request to Cellcom Israel Ltd., 10 Hagavish
Street, Netanya, Israel (attention: Chief Financial Officer).

About Cellcom Israel

Cellcom Israel Ltd., established in 1994, is the leading Israeli cellular provider;
Cellcom Israel provides its approximately 3.199 million subscribers (as at December 31,
2012) with a broad range of value added services including cellular and landline
telephony, roaming services for tourists in Israel and for its subscribers abroad and
additional services in the areas of music, video, mobile office etc., based on Cellcom
Israel’s technologically advanced infrastructure. The Company operates an HSPA 3.5
Generation network enabling advanced high speed broadband multimedia services, in addition
to GSM/GPRS/EDGE networks. Cellcom Israel offers Israel’s broadest and largest customer
service infrastructure including telephone customer service centers, retail stores, and
service and sale centers, distributed nationwide. Through its broad customer service
network Cellcom Israel offers technical support, account information, direct to the door
parcel delivery services, internet and fax services, dedicated centers for hearing
impaired, etc. Cellcom Israel further provides through its wholly owned subsidiaries
internet connectivity services and international calling services, as well as landline
telephone communication services in Israel, in addition to data communication services.
Cellcom Israel’s shares are traded both on the New York Stock Exchange (CEL) and the Tel
Aviv Stock Exchange (CEL). For additional information please visit the Company’s website
http://www.cellcom.co.il [http://investors.ircellcom.co.il/events.cfm ]

Forward-Looking Statements

The following information contains, or may be deemed to contain forward-looking
statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995 and
the Israeli Securities Law, 1968). In some cases, you can identify these statements by
forward-looking words such as “may,” “might,” “will,” “should,” “expect,” “plan,”
“anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of
these terms and other comparable terminology. These forward-looking statements, which are
subject to risks, uncertainties and assumptions about the Company, may include projections
of the Company’s future financial results, its anticipated growth strategies and
anticipated trends in its business. These statements are only predictions based on the
Company’s current expectations and projections about future events. There are important
factors that could cause the Company’s actual results, level of activity, performance or
achievements to differ materially from the results, level of activity, performance or
achievements expressed or implied by the forward-looking statements. Factors that could
cause such differences include, but are not limited to: changes to the terms of the
Company’s license, new legislation or decisions by the regulator affecting the Company’s
operations, new competition and changes in the competitive environment, the outcome of
legal proceedings to which the Company is a party, particularly class action lawsuits, the
Company’s ability to maintain or obtain permits to construct and operate cell sites, and
other risks and uncertainties detailed from time to time in the Company’s filings with the
U.S. Securities and Exchange Commission, including under the caption “Risk Factors” in its
Annual Report for the year ended December 31, 2012.

Although the Company believes the expectations reflected in the forward-looking
statements contained herein are reasonable, it cannot guarantee future results, level of
activity, performance or achievements. Moreover, neither the Company nor any other person
assumes responsibility for the accuracy and completeness of any of these forward-looking
statements. The Company assumes no duty to update any of these forward-looking statements
after the date hereof to conform its prior statements to actual results or revised
expectations, except as otherwise required by law.

The Company prepares its financial statements in accordance with International
Financial Reporting Standards (IFRS), as issued by the International Accounting Standards
Board (IASB). Unless noted specifically otherwise, the dollar denominated figures were
converted to US$ using a convenience translation based on the New Israeli Shekel (NIS)\US$
exchange rate of NIS 3.733 = US$ 1 as published by the Bank of Israel for December 31,
2012.

Use of non-IFRS financial measures

EBITDA is a non-IFRS measure and is defined as income before financing income
(expenses), net; other income (expenses), net; income tax; depreciation and amortization
and share based payments. This is an accepted measure in the communications industry. The
Company presents this measure as an additional performance measure as the Company believes
that it enables us to compare operating performance between periods and companies, net of
any potential differences which may result from differences in capital structure, taxes,
age of fixed assets and related depreciation expenses. EBITDA should not be considered in
isolation, or as a substitute for operating income, any other performance measures, or
cash flow data, which were prepared in accordance with Generally Accepted Accounting
Principles as measures of profitability or liquidity. EBITDA does not take into account
debt service requirements, or other commitments, including capital expenditures, and
therefore, does not necessarily indicate the amounts that may be available for the
Company’s use. In addition, EBITDA may not be comparable to similarly titled measures
reported by other companies, due to differences in the way these measures are calculated.
See the reconciliation between the net income and the EBITDA presented at the end of this
Press Release.

Free cash flow is a non-IFRS measure and is defined as the net cash provided by
operating activities minus the net cash used in investing activities excluding short-term
investment in tradable debentures and deposits and proceeds from sales of such debentures
(including interest received in relation to such debentures) and deposits. See the
reconciliation note in this Press Release.

Financial Tables Follow

Cellcom Israel Ltd.

(An Israeli Corporation)

Consolidated Statements of Financial Position

                                                                  Convenience
                                                                  translation
                                                                         into
                                                                    US dollar
                                           December    December
                                                31,         31,  December 31,
                                               2011        2012          2012
                                                NIS         NIS
                                           millions    millions  US$ millions
        Assets
        Cash and cash equivalents               920       1,414           379
        Current investments, including
        derivatives                             290         493           132
        Trade receivables                     1,859       1,856           497
        Other receivables                        93          67            18
        Inventory                               170         112            30
        Total current assets                  3,332       3,942         1,056
        Trade and other receivables           1,337       1,219           327
        Property, plant and equipment,
        net                                   2,168       2,077           556
        Intangible assets, net                1,680       1,515           406
        Deferred tax assets                      40          34             9
        Total non- current assets             5,225       4,845         1,298
        Total assets                          8,557       8,787         2,354
        Liabilities
        Short term credit and current
        maturities of long term loans
        and debentures                          674       1,129           302
        Trade payables and accrued
        expenses                              1,026         827           221
        Current tax liabilities                  69          87            23
        Provisions                              148         175            47
        Other payables, including
        derivatives                             547         492           132
        Dividend declared                       189           -             -
        Total current liabilities             2,653       2,710           725
        Long-term loans from banks               19          10             3
        Debentures                            5,452       5,368         1,438
        Provisions                               21          21             6
        Other long-term liabilities              41          21             6
        Liability for employee rights
        upon retirement, net                     10          12             3
        Deferred tax liabilities                174         145            39
        Total non- current liabilities        5,717       5,577         1,495
        Total liabilities                     8,370       8,287         2,220
        Equity attributable to owners
        of the Company
        Share capital                             1           1             -
        Cash flow hedge reserve                   7         (12)           (3)
        Retained earnings                       175         509           136
        Non-controlling interest                  4           2             1
        Total equity                            187         500           134
        Total liabilities and equity          8,557       8,787         2,354

Cellcom Israel Ltd.

(An Israeli Corporation)

Consolidated Statements of Income

                                                                Convenience
                                                                translation
                                                                       into
                                                                  US dollar
                                Year
                               ended   Year ended  Year ended    Year ended
                            December     December    December
                                 31,          31,         31,  December 31,
                                2010         2011        2012          2012
                                 NIS          NIS         NIS
                            millions     millions    millions  US$ millions
        Revenues               6,662        6,506       5,938         1,591
        Cost of revenues      (3,322)      (3,408)     (3,463)         (928)
        Gross profit           3,340        3,098       2,475           663
        Selling and
        marketing
        expenses                (756)        (990)       (865)         (232)
        General and
        administrative
        expenses                (641)        (685)       (629)         (168)
        Other income
        (expenses), net           (5)          (1)          4             1
        Operating profit       1,938        1,422         985           264
        Financing income         106          116         181            48
        Financing
        expenses                (336)        (409)       (440)         (118)
        Financing
        expenses, net           (230)        (293)       (259)          (70)
        Profit before
        taxes on income        1,708        1,129         726           194
        Taxes on income         (417)        (304)       (195)          (52)
        Profit for the
        year                   1,291          825         531           142
        Attributable to:
        Owners of the
        Company                1,291          824         530           142
        Non-controlling
        interests                  -            1           1             -
        Profit for the
        year                   1,291          825         531           142
        Earnings per
        share
        Basic earnings
        per share (in
        NIS)                   13.04         8.28        5.34          1.43
        Diluted earnings
        per share (in
        NIS)                   12.98         8.28        5.33          1.43

Cellcom Israel Ltd.

(An Israeli Corporation)

Consolidated Statements of Cash Flows

                                                                    Convenience
                                                                    translation
                                                                           into
                                                                      US dollar
                                Year ended  Year ended  Year ended   Year ended
                                  December    December    December     December
                                       31,         31,         31,          31,
                                      2010        2011        2012         2012
                                       NIS         NIS         NIS          US$
                                  millions    millions    millions     millions
        Cash flows from
        operating activities
        Profit for the year          1,291         825         531          142
        Adjustments for:
        Depreciation and
        amortization                   724         738         765          205
        Share based payment              1           6           7            2
        Loss on sale of
        property, plant and
        equipment                        5           -           2            -
        Gain on sale of shares
        in an associate                  -           -          (6)          (2)
        Income tax expense             417         304         195           52
        Financing expenses, net        230         293         259           70
        Other expenses                   -           2           2            -
        Changes in operating
        assets and liabilities:
        Change in inventory              -         (67)         52           14
        Change in trade
        receivables (including
        long- term amounts)            172        (585)        183           49
        Change in other
        receivables (including
        long- term amounts)             (6)         61           6            2
        Change in trade
        payables, accrued
        expenses and provisions        (42)        146         (89)         (23)
        Change in other
        liabilities (including
        long-term amounts)             (16)        (52)        (92)         (24)
        Proceeds from (payments
        for) derivative hedging
        contracts, net                 (16)        (14)         20            5
        Income tax paid               (380)       (325)       (209)         (56)
        Income tax received              -           -          15            4
        Net cash from operating
        activities                   2,380       1,332       1,641          440
        Cash flows from
        investing activities
        Acquisition of
        property, plant, and
        equipment                     (441)       (333)       (457)        (122)
        Acquisition of
        intangible assets             (180)        (99)        (97)         (26)
        Acquisition of activity       (108)          -           -            -
        Acquisition of
        subsidiary, net of cash
        acquired                         -      (1,458)          -            -
        Change in current
        investments, net              (154)        197        (212)         (57)
        Proceeds from (payments
        for) other derivative
        contracts, net                 (17)          1           9            2
        Proceeds from sale of
        property, plant and
        equipment                        2           3           7            2
        Interest received                9          33          35            9
        Proceeds from sale of
        shares in a
        consolidated company             -           -           7            2
        Net cash used in
        investing activities          (889)     (1,656)       (708)        (190)

Cellcom Israel Ltd.

(An Israeli Corporation)

Consolidated Statements of Cash Flows (cont.)

                                                                      Convenience
                                                                      translation
                                                                             into
                                                                        US dollar
                             Year ended    Year ended    Year ended    Year ended
                           December 31,  December 31,  December 31,  December 31,
                                   2010          2011          2012          2012
                           NIS millions  NIS millions  NIS millions  US$ millions
        Cash flows from
        financing
        activities
        Proceeds from
        (payments for)
        derivative
        contracts, net               34            11          (12)           (3)
        Repayment of long
        term loans from
        banks                        (8)           (4)         (16)           (4)
        Repayment of
        debentures                 (343)         (354)        (660)         (177)
        Proceeds from
        issuance of
        debentures, net of
        issuance costs                -         2,165          992           265
        Dividend paid            (1,319)         (858)        (391)         (105)
        Interest paid              (225)         (245)        (352)          (94)
        Net cash from
        (used in)
        financing
        activities               (1,861)          715         (439)         (118)
        Cash balance
        presented under
        assets held for
        sale                          -            (4)           -             -
        Changes in cash
        and cash
        equivalents                (370)          387          494           132
        Cash and cash
        equivalents as at
        the beginning of
        the year                    903           533          920           247
        Cash and cash
        equivalents as at
        the end of the
        year                        533           920        1,414           379

Cellcom Israel Ltd.

(An Israeli Corporation)

Reconciliation for Non-IFRS Measures

EBITDA

The following is a reconciliation of net income to EBITDA:

                                                                    Convenience
                                                                     translation
                                                                       into US
                                                                        dollar
                                                                      Year ended
                                     Year ended December 31          December 31
                                  2010      2011        2012            2012
                                   NIS       NIS        NIS
                                millions  millions    millions      US$ millions
        Net income                  1,291       825          531            142
        Income taxes                  417       304          195             52
        Financing income            (106)     (116)        (181)           (48)
        Financing expenses            336       409          440            118
        Other expenses
        (income)                        5         1          (4)            (1)
        Depreciation and
        amortization                  724       738          765            205
        Share based
        payments                        -         6            7              2
        EBITDA                      2,667     2,167        1,753            470

Free cash flow

The following table shows the calculation of free cash flow:

                                                                 Convenience
                                                                  translation
                                                                    into US
                                                                    dollar
                                                                   Year ended
                                     Year ended December 31       December 31
                                 2010      2011        2012          2012
                                 NIS       NIS        NIS
                               millions  millions    millions    US$ millions
        Cash flows from
        operating
        activities              2,380     1,332        1,641          440
        Cash flows from
        investing
        activities              (889)   (*)(198)        (708)         (190)
        short-term
        Investment in
        (sale of) tradable
        debentures               154      (197)     (**)197            53
        Free cash flow         1,645       937        1,130           303

(*) After elimination of the net cash flows used for the acquisition of Netvision in
the amount of NIS 1,458 million (net of cash acquired in the amount of NIS 120 million).

(**) Net of interest received in relation to tradable debentures.

Cellcom Israel Ltd.

Disclosure for debenture holders as of December 31, 2012

                          Principal
                Original  on the
                Issuance  Date of
        Series  Date      Issuance  As of 31.12.2012
                                    Principal
                                              Linked
                                    Balance   Principal
                                    on Trade  Balance
        B(4) ** 22/12/05
                02/01/06*
                05/01/06*
                10/01/06*
                31/05/06*   925.102   925.102 1,094.657
        C       07/10/07
                03/02/08*       326    36.222    41.818
        D **    07/10/07
                03/02/08*
                06/04/09*
                30/03/11*
                18/08/11* 2,423.075 2,423.075 2,797.456
        E **    06/04/09
                30/03/11*
                18/08/11* 1,798.962 1,499.135 1,499.135
        F(4)    20/03/12    714.802   714.802   725.112
        (5) **

        G(4)    20/03/12    285.198   285.198   285.198
        (5)
        Total             6,473.139 5,883.534 6,443.376

Aggregation of the information regarding the debenture series issued by the company
(1), in million NIS

TABLE CONTINUED

        Series                                      As of 31.12.2012
                              Debenture
                   Interest     Balance             Principal Linked
                Accumulated    Value in  Market    Balance   Principal
                   in Books    Books(2)  Value     on Trade  Balance
        B(4) **      57.224   1,151.881   953.299   740.081   875.725
        C             0.643      42.462    42.456         -         -
        D **         72.793   2,870.249 3,112.925 2,423.075 2,797.456
        E **         92.412   1,591.547 1,273.186 1,199.308 1,199.308
        F(4)
        (5) **
                     15.469     740.580   789.642   714.802    725.11
        G(4)
        (5)           9.427     294.625   313.689   285.198   285.198
        Total       247.968   6,691.344 6,485.197 5,362.464 5,882.797

TABLE CONTINUED

                                                                Trustee
                            Principal         Interest
                Interest    Repayment Dates   Repayment         Contact
        Series  Rate(fixed) (3)               Dates     Linkage Details
                            From     To
                                                                Hermetic
                                                                Trust (1975)
                                                                Ltd. Meirav
                                                                Ofer Oren.
                                                                113 Hayarkon
                                                                St., Tel
                                                        Linked  Aviv. Tel:
        B(4) **       5.30% 05.01.13 05.01.17 January 5 to CPI  03-5274867.
                                                                Reznik, Paz,
                                                                Nevo Trusts
                                                                Ltd.
                                                                Accountant
                                                                Yossi
                                                                Reznik. 14
                                              March 1           Yad Haruzim
                                              and               St., Tel
                                              September Linked  Aviv. Tel:
        C             4.60% 01.03.09 01.03.13 1         to CPI  03-6393311.
                                                                Hermetic
                                                                Trust (1975)
                                                                Ltd. Meirav
                                                                Ofer Oren.
                                                                113 Hayarkon
                                                                St., Tel
                                                        Linked  Aviv. Tel:
        D **          5.19% 01.07.13 01.07.17 July 1    to CPI  03-5274867.
                                                                Hermetic
                                                                Trust (1975)
                                                                Ltd. Meirav
                                                                Ofer Oren.
                                                                113 Hayarkon
                                                                St., Tel
                                                        Not     Aviv. Tel:
        E **          6.25% 05.01.12 05.01.17 January 5 linked  03-5274867.
                                                                Strauss
                                                                Lazar Trust
                                                                Company
                                                                (1992) Ltd
                                                                Ori Lazar
                                                                17 Yizhak
                                              January 5         Sadeh St.,
        F(4)                                                    Tel Aviv.
        (5) **                                and July  Linked  Tel: 03-
                      4.35% 05.01.17 05.01.20 5         to CPI  6237777
                                                                Strauss
                                                                Lazar Trust
                                                                Company
                                                                (1992) Ltd
                                                                Ori Lazar
                                                                17 Yizhak
                                              January 5         Sadeh St.,
                                                                Tel Aviv.
        G(4)                                  and July  Not     Tel: 03-
        (5)           6.74% 05.01.17 05.01.19 5         linked  6237777
        Total

Comments:

(1) In the reported period, the company fulfilled all terms of the debentures. The
company also fulfilled all terms of the Indentures. In 2012, no cause for early repayment
occurred. Debentures F and G financial covenants – as of December 31, 2012 the net
leverage (net debt to EBITDA ratio- see definition in the Company’s annual report for the
year ended December 31, 2012 on Form 20-F, under “Item 5. Operating and Financial Review
and Prospects – B. Liquidity and Capital Resources – Debt Service – Shelf prospectus”) was
2.60. (2) Including interest accumulated in the books. (3) Annual payments, excluding
series C, F and G debentures in which the payments are semi annual. (4) Regarding
Debenture series B, F and G- the company undertook not to create any pledge on its assets,
as long as debentures are not fully repaid, subject to certain exclusions. (5) Regarding
Debenture series F and G – the company has the right for early redemption under certain
terms (see the Company’s annual report for the year ended December 31, 2012 on Form 20-F,
under “Item 5. Operating and Financial Review and Prospects- B. Liquidity and Capital
Resources – Debt Service – Shelf prospectus”).

(*) On these dates additional debentures of the series were issued, the information in
the table refers to the full series.

(**) Series B, D, E and F are material, which represent 5% or more of the total
liabilities of the Company, as presented in the financial statements.

Cellcom Israel Ltd.

Disclosure for debenture holders as of December 31, 2012 (cont.)

Debentures Rating Details*

                                                         Rating
                                Rating as               assigned
                                   of       Rating as    upon      Recent date of
                               31.12.2012     of      issuance of  rating as of
        Series  Rating Company    (1)      04.03.2013  the Series  04.03.2013
        B        S&P Maalot       AA-         AA-       AA-        11/2012
        C        S&P Maalot       AA-         AA-       AA-        11/2012
        D        S&P Maalot       AA-         AA-       AA-        11/2012
        E        S&P Maalot       AA-         AA-       AA         11/2012
        F        S&P Maalot       AA-         AA-       AA         11/2012
        G        S&P Maalot       AA-         AA-       AA         11/2012

TABLE CONTINUED

        Additional ratings between original issuance
        and the recent date of rating as of
        Series      04.03.2013 (2)
                    Rating
        B            5/2006, 9/2007, 1/2008, 10/2008,      AA-, AA,AA-(2)
                     3/2009, 9/2010, 8/2011, 1/2012,
                     3/2012, 5/2012, 11/2012 

        C            1/2008, 10/2008, 3/2009, 9/2010,      AA-, AA,AA-(2)
                     8/2011, 1/2012, 3/2012, 5/2012,
                     11/2012 

        D            1/2008, 10/2008, 3/2009, 9/2010,      AA-, AA,AA-(2)
                     8/2011, 1/2012, 3/2012, 5/2012,
                     11/2012 

        E            9/2010, 8/2011, 1/2012, 3/2012,       AA,AA-(2)
                     5/2012, 11/2012   

        F            5/2012, 11/2012                       AA,AA-(2)

        G            5/2012, 11/2012                       AA,AA-(2)

        1) In May 2012, S&P Maalot updated the Company's rating from an
          "ilAA/negative" to an "ilAA-/negative".
        2) In September 2007, S&P Maalot issued a notice that the AA- rating for
          debentures issued by the Company was in the process of recheck with positive
          implications (Credit Watch Positive). In October 2008, S&P Maalot issued a notice that
          the AA- rating for debentures issued by the Company is in the process of recheck with
          stable implications (Credit Watch Stable). This process was withdrawn upon assignment
          of AA rating in March 2009. In August 2011, S&P Maalot issued a notice that the AA
          rating for debentures issued by the Company is in the process of recheck with negative
          implications (Credit Watch Negative). In May 2012, S&P Maalot updated the Company's
          rating from an "ilAA/negative" to an "ilAA-/negative". In November 2012, S&P Maalot
          affirmed the Company's rating of "ilAA-/negative". For details regarding the rating of
          the debentures see the S&P Maalot report dated November 4, 2012.

* Asecurities rating is not a recommendation to buy, sell or hold securities. Ratings
may be subject to suspension, revision or withdrawal at any time, andeach rating should be
evaluated independently of any otherrating.

Cellcom Israel Ltd.

Summary of Financial Undertakings (according to repayment dates) as of December 31,
2012

a. Debentures issued to the public by the Company and held by the public, excluding
such debentures held by the Company’s parent company, by a controlling shareholder, by
companies controlled by them, or by companies controlled by the Company, based on the
Company’s “solo” financial data (in thousand NIS).

                                                                  Gross
                                                                  interest
                                                                  payments
                                                                  (without
                                                                  deduction
                                    Principal payments            of tax)
                                      ILS not
                          ILS linked  linked to Euro
                          to CPI      CPI            Dollar Other
        First year          775,542    290,443   -     -      -     333,349
        Second year         736,559    290,443   -     -      -     275,844
        Third year          736,559    290,443   -     -      -     219,235
        Fourth year         736,559    290,443   -     -      -     162,763
        More than five
        years              1,435,621   572,361   -     -      -     157,155
        Total              4,420,840  1,734,135  -     -      -    1,148,345

b. Private debentures and other non-bank credit, excluding such debentures held by the
Company’s parent company, by a controlling shareholder, by companies controlled by them,
or by companies controlled by the Company, based on the Company’s “solo” financial data
(in thousand NIS) – None

c. Credit from banks in Israel based on the Company’s “solo” financial data (in
thousand NIS) – None

d. Credit from banks abroad based on the Company’s “solo” financial data (in thousand
NIS) – None

e. Total of sections a – d above, total credit from banks, non-bank credit and
debentures based on the Company’s “solo” financial data (in thousand NIS).

                                                                  Gross
                                                                  interest
                                                                  payments
                                                                  (without
                                                                  deduction
                                    Principal payments            of tax)
                                      ILS not
                          ILS linked  linked to Euro
                          to CPI      CPI            Dollar Other
        First year          775,542    290,443   -     -      -     333,349
        Second year         736,559    290,443   -     -      -     275,844
        Third year          736,559    290,443   -     -      -     219,235
        Fourth year         736,559    290,443   -     -      -     162,763
        More than five
        years              1,435,621   572,361   -     -      -     157,155
        Total              4,420,840  1,734,135  -     -      -    1,148,345

f. Out of the balance sheet Credit exposure based on the Company’s “solo” financial
data – None

g. Out of the balance sheet Credit exposure of all the Company’s consolidated
companies, excluding companies that are reporting corporations and excluding the Company’s
data presented in section f above (in thousand NIS) – None

h. Total balances of the credit from banks, non-bank credit and debentures of all the
consolidated companies, excluding companies that are reporting corporations and excluding
Company’s data presented in sections a – d above (in thousand NIS).

Cellcom Israel Ltd.

Summary of Financial Undertakings (according to repayment dates) as of December 31,
2012 (cont.)

                                                                Gross
                                                                interest
                                                                payments
                                                                (without
                                                                deduction
                                   Principal payments           of tax)
                                     ILS not
                          ILS linked linked   Euro
                          to CPI     to CPI        Dollar Other
        First year            -       8,791    -     -      -      1,103
        Second year           -       5,041    -     -      -       602
        Third year            -       5,041    -     -      -       302
        Fourth year           -         15     -     -      -        -
        More than five
        years                 -         -      -     -      -        -
        Total                 -       18,888   -     -      -      2,007

i. Total balances of credit granted to the Company by the parent company or a
controlling shareholder and balances of debentures offered by the Company held by the
parent company or the controlling shareholder (in thousand NIS).

                                                                Gross
                                                                interest
                                                                payments
                                                                (without
                                                                deduction
                                   Principal payments           of tax)
                                     ILS not
                          ILS linked linked   Euro
                          to CPI     to CPI        Dollar Other
        First year            -         12     -     -      -        4
        Second year           -         12     -     -      -        3
        Third year            -         12     -     -      -        2
        Fourth year           -         12     -     -      -        1
        More than five
        years                 -         12     -     -      -        1
        Total                 -         58     -     -      -       11

j. Total balances of credit granted to the Company by companies held by the parent
company or the controlling shareholder, which are not controlled by the Company, and
balances of debentures offered by the Company held by companies held by the parent company
or the controlling shareholder, which are not controlled by the Company (in thousand NIS).

                                                                   Gross
                                                                 interest
                                                                 payments
                                                                 (without
                                                                 deduction
                                   Principal payments             of tax)
                                     ILS not
                          ILS linked  linked  Euro
                            to CPI    to CPI       Dollar Other
        First year          44,670    9,372    -     -      -     15,275
        Second year         41,864    9,372    -     -      -     12,439
        Third year          41,864    9,372    -     -      -      9,667
        Fourth year         41,864    9,372    -     -      -      6,900
        More than five
        years               67,913    12,652   -     -      -      5,736
        Total              238,175    50,141   -     -      -     50,018

Cellcom Israel Ltd.

Summary of Financial Undertakings (according to repayment dates) as of December 31,
2012 (cont.)

k. Total balances of credit granted to the Company by consolidated companies and
balances of debentures offered by the Company held by the consolidated companies (in
thousand NIS)

                                                                Gross
                                                                interest
                                                                payments
                                                                (without
                                                                deduction
                                   Principal payments           of tax)
                                     ILS not
                          ILS linked linked   Euro
                          to CPI     to CPI        Dollar Other
        First year            -         -      -     -      -      1,234
        Second year           -       26,371   -     -      -      1,234
        Third year            -         -      -     -      -        -
        Fourth year           -         -      -     -      -        -
        More than five
        years                 -         -      -     -      -        -
        Total                 -       26,371   -     -      -      2,468

        Company Contact
        Yaacov Heen
        Chief Financial Officer
        investors@cellcom.co.il
        Tel: +972-52-998-9755

        IR Contacts
        Porat Saar
        CCG Investor Relations Israel & US
        cellcom@ccgisrael.com
        Tel: +1-646-233-2161

.

SOURCE Cellcom Israel Ltd.


Source: PR Newswire